SMR + CCS and ATR + CCS: proven routes producing certified low-carbon hydrogen today.
Blue hydrogen is produced by steam methane reforming (SMR) or autothermal reforming (ATR) of natural gas — or by coal gasification — with the CO₂ produced in the reforming process captured and stored geologically. The result is a hydrogen stream with a lifecycle carbon intensity of 2–4 kg CO₂/kg H₂ — compared to 10–12 kg CO₂/kg H₂ for conventional grey hydrogen from natural gas SMR without CCS, and effectively zero for green hydrogen from electrolysis using renewable electricity.
For India, blue hydrogen plays a specific strategic role in the National Hydrogen Mission: it provides a commercially viable, near-term source of low-carbon hydrogen for sectors where conventional hydrogen is currently used (fertilisers, refineries, chemicals) while green hydrogen production capacity and cost competitiveness develop. Blue hydrogen from India's natural gas-based SMR infrastructure can be produced at approximately USD 1.5–2.5/kg — significantly below the current USD 4–7/kg cost of green hydrogen in India. This cost gap will narrow as green hydrogen scales, but blue hydrogen provides a critical bridge that avoids locking in unabated fossil hydrogen use during the transition.
India's major refinery SMR units — at IOCL Panipat, HPCL Vizag, BPCL Mumbai, and MRPL Mangalore — are all technically capable of retrofit for CCS, converting their existing hydrogen production to blue hydrogen at a capital cost of approximately USD 200–400 million per site. NCM has assessed three of these sites and found positive NPV under realistic blue hydrogen premium pricing and government green hydrogen incentive frameworks.
Annual hydrogen demand from India's fertiliser sector — primary market for blue hydrogen near-term
Per-kg blue hydrogen production cost — vs $4–7/kg for green hydrogen in India today
kg CO₂ per kg H₂ from conventional SMR — vs 2–4 kg CO₂/kg H₂ for blue hydrogen with CCS
India's National Hydrogen Mission 2030 target — blue H₂ is the near-term complement to green
Synthetic fuels use captured CO₂ and green hydrogen as feedstocks — creating drop-in fuels for aviation, shipping, and heavy road transport that cannot be electrified.
CO₂ + green H₂ → Fischer-Tropsch synthesis → sustainable aviation fuel. India's aviation sector — growing at 8–10%/year — will face CORSIA obligations from 2027 requiring sustainable fuel blending. Premium offtake from Air India, IndiGo, and international carriers creates the revenue base for SAK production.
Green ammonia (N₂ + green H₂) and e-methanol (CO₂ + green H₂) are the leading zero-carbon marine fuels under IMO 2050 decarbonisation targets. India's port sector — Mundra, JNPT, Paradip — positions India as both a producer and bunkering hub for maritime synthetic fuels.
CO₂ methanation (Sabatier reaction): CO₂ + 4H₂ → CH₄ + 2H₂O. Produces synthetic natural gas that is drop-in compatible with India's existing gas infrastructure. Particularly relevant for seasonal storage of renewable electricity surpluses in gas-network-connected regions.
CO₂ + green H₂ → syngas → Fischer-Tropsch → synthetic diesel. Hard-to-electrify heavy road freight — India's 5 million trucks — is a large potential demand market. Cost currently high but declining with green H₂ trajectory.
India's refinery sector is the largest near-term blue hydrogen opportunity. India's 23 refineries collectively consume approximately 3.5 MT of hydrogen per year — almost entirely from unabated fossil SMR. Converting this demand to blue hydrogen requires CCS retrofit at refinery SMR units. The business case is straightforward: Indian refineries face increasing Scope 1 reporting pressure from international shareholders, EU CBAM exposure on refined petroleum product exports, and direct regulatory pressure from MoP&NG's energy transition mandate. Blue hydrogen from SMR + CCS satisfies all three simultaneously.
India's fertiliser sector is the second major blue hydrogen market — replacing the fossil CO₂ feedstock and fossil hydrogen in ammonia synthesis with certified blue alternatives. The combination of blue ammonia (from ATR + CCS) and captured CO₂ feedstock produces fully decarbonised urea at a production cost premium of approximately 15–25% over conventional urea — a cost that is recoverable through the green urea premium in European export markets and through India's evolving green fertiliser procurement policy.
For synthetic fuels, India's competitive advantage is its falling renewable electricity cost combined with its geographic position as a potential export hub for synthetic fuels to Japan, South Korea, and Europe. Japan's bilateral Article 6.2 agreement with India specifically contemplates synthetic fuel supply as an eligible clean energy trade. NCM is developing the commercial framework for India's first synthetic fuel export facility — a 50,000 tonne/year e-methanol plant in Gujarat structured for Article 6 credit generation alongside product revenue.
NCM's blue hydrogen advisory integrates four components: pre-combustion CCS feasibility for the SMR or ATR unit, CO₂ storage pathway identification (geological or utilisation), blue hydrogen certification (CertifHy, ISCC+, or India Hydrogen Mission framework), and offtake market development. The certification strategy is particularly important — different markets (EU, Japan, South Korea) accept different lifecycle carbon accounting methodologies, and the certificate design determines which markets India's blue hydrogen can access and at what premium.
For synthetic fuels, NCM's advisory begins with a power-to-X economics assessment — modelling the cost of green hydrogen at the client's specific location and time of use, the CO₂ supply cost from identified capture sources, the synthesis capital cost, and the achievable offtake price in target markets (CORSIA SAF, IMO-compliant marine fuel, Article 6 export). The power-to-X economics are extremely sensitive to green hydrogen cost, and NCM's analysis uses India-specific renewable energy projections rather than global averages — because Rajasthan and Gujarat's solar costs are already well below the global average and falling faster.
NCM also provides Article 6 transaction structuring for synthetic fuel exports — working with Japan, Australia, and Singapore's bilateral agreement frameworks to design the measurement, reporting, and verification system that generates certified carbon credits alongside product revenue. These credits can be sold separately to voluntary carbon market buyers or transferred to the importing nation as part of the bilateral agreement, adding a significant additional revenue stream to synthetic fuel project economics.
Whether you are a government body seeking policy advice, an industrial company facing CBAM exposure, or an investor seeking CCUS project opportunities — our team is ready to engage.